We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Morrison (wm) Supermarkets Plc | LSE:MRW | London | Ordinary Share | GB0006043169 | ORD 10P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 286.40 | 286.60 | 286.70 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMMRW
RNS Number : 6159Y
Morrison(Wm.)Supermarkets PLC
10 September 2015
10 September 2015
INTERIM RESULTS FOR THE HALF YEAR TO 2 AUGUST 2015
Making the core supermarkets strong again
Financial summary
-- H1 like-for-like (LFL) sales (ex-fuel/ex-VAT) down 2.7%, Q2 LFL down 2.4% -- Total turnover down 5.1% to GBP8.1bn (2014/15: GBP8.5bn) -- Underlying profit before tax(1) (UPBT) down 35% to GBP117m (2014/15: GBP181m) -- UPBT GBP141m pre-restructuring costs (2014/15: GBP216m) -- Free cash flow pre-dividend of GBP479m (2014/15: GBP423m) -- Generated GBP64m of cash, post-dividend and pre-property disposals -- Underlying earnings per share(1) (EPS) down 35% to 3.73p (2014/15: 5.74p) -- Profit before tax GBP126m (2014/15: GBP239m) -- Operating working capital improvement of GBP125m -- Property disposal proceeds of GBP181m, profit of GBP96m achieved -- Impairment and provision for onerous contracts of GBP87m -- Interim dividend of 1.50p (2014/15: 4.03p). Full year dividend confirmed at not less than 5.00p -- Net debt reduced by GBP254m since year end, to GBP2,086m
Strategic and operating highlights
-- Listening programme shaping new strategy -- Six priorities to build on our strengths and improve the customer shopping trip: 1. To be more competitive 2. To serve customers better 3. Find local solutions 4. Develop popular and useful services 5. To simplify and speed up the organisation 6. To make the core supermarkets strong again -- Progress being made on the six priorities and customer satisfaction improving -- Key appointments to the new Executive team -- GBP1bn cost savings programme on-track, a further GBP189m delivered in first half -- Substantial proposition re-investment, up year-on-year to GBP181m in first half -- GBP2bn operating free cash flow target on-track for 2014/15-2016/17 -- Sale of 140 M local convenience stores announced yesterday -- Proposed closure of a further 11 supermarkets announced today
Andrew Higginson, Chairman, said:
"David has very quickly formed a new team that combines the best of Morrisons home grown and external talent. I am also delighted that two new non-executive directors - Belinda Richards and Irwin Lee - have recently joined and strengthened the Board. They bring a wealth of experience, which will prove invaluable to Morrisons.
"During the first half, the team has made good progress in starting the turnaround journey. Whilst the management team need time to settle in, make the changes they see as important, and build trading momentum, I believe the team will deliver much improved profits and returns for shareholders."
David Potts, Chief Executive, said:
"Since joining Morrisons, I have been struck by the passion and commitment of all our colleagues, and I want to thank them for their continued good work. Our colleagues have the key role in delivering an improved shopping trip for customers both in stores and online.
"Morrisons will be an organisation that listens. During the first half, the new Executive and leadership teams have been listening hard to colleagues, customers, suppliers and shareholders. They tell us there is a lot for us to do.
"The immediate priority is to deliver a better shopping trip to stabilise trading performance. Our six strategic priorities will then deliver improvement in the core supermarkets, where we have the greatest opportunity.
"It will be a long journey. We approach the challenge with energy, confidence and many strengths, particularly our strong balance sheet and cash flow, which enables investment in improving the customer shopping trip."
Outlook
Customers and colleagues are beginning to notice improvements, but the turnaround will take time and require sustained investment in the proposition.
As previously guided, we expect underlying profit before tax will be higher in the second half of 2015/16 than the first.
Sales performance (ex-VAT)
2014/15 2015/16 ----------------- ------------------------------ -------------- Q1 Q2 Q3 Q4 Q1 Q2 ----------------- ------ ------ ------ ------ ------ ------ Group LFL: ----------------- ------ ------ ------ ------ ------ ------ Sales ex-fuel* -7.1% -7.6% -6.3% -2.6% -2.9% -2.4% ----------------- ------ ------ ------ ------ ------ ------ Sales inc-fuel* -8.2% -7.5% -8.0% -5.1% -6.6% -5.4% ----------------- ------ ------ ------ ------ ------ ------
* For supermarkets, online and convenience stores, reported ex-VAT and in accordance with IFRIC 13
Summary of operational key performance indicators (KPIs)
2014/15 2015/16 ----------------- ------------------------------ -------------- Q1 Q2 Q3 Q4 Q1 Q2 ----------------- ------ ------ ------ ------ ------ ------ LFL Items per Basket y-on-y change* -5.9% -3.2% -2.4% -0.1% -0.1% -1.1% ----------------- ------ ------ ------ ------ ------ ------ LFL Number of Transactions y-on-y change* -3.6% -5.0% -3.3% -1.9% -3.2% -2.6% ----------------- ------ ------ ------ ------ ------ ------
* Excludes online and convenience
Notes:
(1) Underlying profit before tax and underlying earnings per share include new business development and restructuring costs, but exclude profit/loss relating to property disposals and sale of businesses, IAS 19 pension interest, impairment and provision for onerous contracts.
Enquiries:
Wm Morrison Supermarkets PLC Trevor Strain - Chief Financial Officer 0845 611 5000 Andrew Kasoulis - Investor Relations Director 07785 343 515
Media Relations
Wm Morrison Supermarkets PLC: Julian Bailey 07969 061092 Citigate Dewe Rogerson: Simon Rigby 020 7282 2847 Kevin Smith 020 7282 1054
Management will host an analyst presentation this morning at 09:30. A webcast of this meeting is available at http://www.morrisons-corporate.com/Investor-centre/
Dial-in details:
Dial-in number: +44 (0) 20 3427 1915 Password: Morrisons
Replay facility available for 7 days:
Replay access number: +44 (0) 20 3427 0598 Replay access code: 1679501#
- ENDS -
This announcement may include forward-looking statements, which are statements made about potential future events or occurrences. These statements are made by the Directors in good faith, based on the information available to them at the time of the announcement. Consequently such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying such forward-looking statements and information.
Morrisons has a commitment to reducing its impact on the environment. Accordingly we no longer send half-yearly communications to shareholders in paper format. Copies of this release are available to download.
Financial overview
Total turnover during the period was GBP8.1bn, down 5.1% year-on-year. Store turnover of GBP6.4bn, excluding fuel, was down by 1.1%, which comprised a LFL decrease of 2.7% (including a contribution of 1.0% from online) and 1.6% from new stores.
Fuel sales fell by 16.8% to GBP1.6bn, with deflation again a key feature as lower oil prices were passed on to customers.
Q2 ex-fuel LFL was down 2.4%, a slight improvement on Q1 (-2.9%), with online contributing 1.0%. For Q2, Items per Basket was down 1.1% year-on-year, and LFL Number of Transactions down 2.6%.
Underlying operating profit, which excludes impairment and provision for onerous contracts and property disposal profits, was GBP163m, with operating margin down 67bps year-on-year to 2.0%.
Impairment and provision for onerous contracts was GBP87m, driven by changes in estimates to provisions made relating to stores in the new space pipeline. Property disposal profits were GBP96m. Operating profit, including impairment and provision for onerous contracts and property disposal profits, was GBP172m.
Our definition of underlying profit includes restructuring costs and new business development costs. Restructuring costs were GBP24m, primarily comprising head office restructuring (2014/15: GBP35m). This was part of the GBP30m-GBP40m 2015/16 restructuring costs we announced at the time of the first quarter trading update in May. New business development (NBD) losses for online and convenience were GBP30m (2014/15: GBP38m).
In addition, we are today announcing further restructuring and one-off costs, which will be incurred in the second half as we continue to reshape the business.
The proposed closure of 11 further stores will incur a restructuring cost of GBP20m, which will be included in underlying profit.
As announced yesterday, the sale of M local will result in a loss on disposal of around GBP30m. The intent to establish a new defined contribution pension scheme, which it is proposed will become the auto-enrolment scheme for colleagues in the future, will result in a charge of GBP35m. Both of these one-off costs will be excluded from our definition of underlying profit.
Net finance costs were GBP47m (2014/15: GBP49m).
UPBT(1) was GBP117m (2014/15: GBP181m). Adding back the GBP24m one-off restructuring costs, UPBT was GBP141m (2014/15: GBP216m). Reported profit before tax, after GBP9m net profit on property, was GBP126m (2014/15: GBP239m).
(MORE TO FOLLOW) Dow Jones Newswires
September 10, 2015 02:01 ET (06:01 GMT)
Underlying basic EPS(1) reduced by 35% to 3.73p (2014/15: 5.74p), reflecting the decrease in UPBT.
Capital expenditure fell to GBP139m, from GBP257m for 2014/15, with cuts in all areas, in particular new store openings.
Free cash flow pre-dividend was GBP479m, which included a further GBP125m improvement in operating working capital and GBP181m of property disposal proceeds. Half way into our three year plan to generate GBP2bn of operating free cash flow by the end of 2016/17, we have achieved GBP1,264m.
Overall, post-dividend and pre-property disposal proceeds, Morrisons was again cash flow positive, generating GBP64m during the first half.
Group net debt fell - to GBP2,086m - from GBP2,340m at the end of 2014/15, and is down over GBP500m from the same time last year.
The proposed interim dividend is 1.50p.
We opened one new supermarket (26,000 square feet) and five M locals (14,000 square feet). As previously announced, we closed ten smaller supermarkets and 23 M locals. The impact was a reduction of 94,000 square feet in net new space.
Return on Capital Employed (ROCE) was 5.3%.
Market update
The economic recovery has been sustained in recent months. A rise in consumer confidence, real wage growth, and higher disposable income are all potentially positive for food retailers. Fuel prices have fallen and are expected to remain low.
However, we have seen no change in shopping habits, with customers continuing to shop around for value and shopping more frequently. In addition, as we continue to lower prices, deflation has been a consistent recent feature of our LFL. Although some commentators predict the return of food price inflation, driven perhaps by higher global commodity prices, we expect deflation to continue as we keep investing in our proposition.
Strategy update
Morrisons has many strengths. It is a strong British business, with a reputation for fresh food, value-for-money, customer service, and the provenance provided by our unique vertical integration. Our colleagues are committed, passionate and highly skilled. The business is cash generative, with a strong balance sheet, a freehold property portfolio, a well-funded pension, falling debt and a well-invested manufacturing business.
However, sales, profitability and returns all need to improve. Our immediate priority is to deliver a better customer shopping trip to stabilise trading performance. We then need to rebuild.
We are defining our improvement programme by listening to key stakeholders - customers, colleagues, suppliers and shareholders - and this is shaping the development of our strategy. Today we are announcing six strategic priorities:
-- To be more competitive -- To serve customers better -- Find local solutions -- Develop popular and useful services -- To simplify and speed up the organisation -- To make core supermarkets strong again
These priorities will deliver an improvement in the shopping trip and a turnaround of the core supermarkets. It will take time, and some components are still being developed or carefully reviewed by the new leadership team. However, we are confident the strategy is right for all industry trading conditions.
The six priorities also provide the business with many opportunities. The cost base can be reshaped and we can improve all elements of the Morrisons shopping trip. Improving the operational levers - sales, margin and asset intensity - will drive profit and ROCE. Improving the capital levers - addressing underperforming assets and capital returns - will grow the dividend and further enhance EPS. Throughout the process, debt will continue to fall.
The financial foundations of our strategy are unchanged. As previously guided, our proposition investment will increase this year. We also still expect to generate GBP1bn of cost savings and GBP2bn of free cash flow in the three years to 2016/17.
Initial success will be measured through execution and outcome. Improving the shopping trip will mean more customers and more volume growth. Then, once the business is stabilised, we expect to improve LFL sales, rebuild profits and improve Return on Capital, while continuing to generate cash.
The six priorities
1. To be more competitive
Morrisons is a value-for-money brand and must always be competitive. We invested over GBP300m into the proposition last year and will invest more this year, with a further GBP181m already invested in the first half.
In March we cut the prices of key commodities and in June we did the same for everyday items. There will be more to come. We are working towards a simple, great value-for-money Morrisons price list that is right for our customers.
Being competitive is not just about price. We need to set out an offer that has real resonance with customers and organise the business to deliver this consistently. This means striking the right balance of price, coupons and promotions. As part of this process, we are currently reviewing our Match & More proposition.
In addition, we are providing much simpler and clearer in-store messaging for customers. In June, we re-set all in-store point-of-sale material. We further clarified and simplified our promotions, especially at front-of-store and on the key promotion ends. We now have fewer and more impactful promotions, with the typical display now carrying two or three of our very best deals at a simple price point.
2. To serve customers better
Morrisons has a reputation for good customer service. Our butchers, bakers, fishmongers and other skilled colleagues combine to make Morrisons different from other supermarkets. We are doing more to enhance that reputation. During the first half, we recruited 5,000 new in-store colleagues and re-scheduled the mix of hours to serve customers better at the busiest times of the week.
We have launched initiatives to remove wasted effort, improve on-shelf availability and ease pressure on the tills. For example, we have introduced express checkouts into all our stores. We are also currently replacing and upgrading the self-scan checkouts in all stores in time for Christmas, a programme of 40 stores per week.
We have listened to the preferences of our customers and will be re-laying Wine to a new look, by colour and country of origin throughout the next few weeks. In addition, all our Produce departments are currently being given a new look and feel. These are the first of many improvements to come. Customers are beginning to notice and our customer satisfaction scores have improved.
3. Find local solutions
Morrisons stores are generally well located, serving neighbourhoods and communities. We have an opportunity to improve our local customer offer store-by-store and make every square foot work harder to increase sales and profit.
We will tailor each store's offer to local tastes and demographics. A core offer will apply for each store, with managers given autonomy to flex outside the core to best suit local customers. The organisation will be largely central, but the execution local.
In addition, we are introducing programmes to be more active with local marketing and to better utilise our stores as centres of the local community.
4. Develop popular and useful services
We plan to further enhance Morrisons reputation for great customer service. We already have some very strong service areas - for example dry cleaning, where we are the second biggest in the UK, petrol stations, pharmacies, and popular cafés.
Plans are at an early stage, but we see several opportunities to provide third-party in-store or on-site services that will drive footfall to our stores. These will not require us to commit significant capital, but will generate income and enhance returns.
5. To simplify and speed up the organisation
Morrisons is at its best when it keeps things simple. We are delayering the business and building a culture based on speed and teamwork, so we can become more agile and responsive.
During the first half, we completed the in-store restructure and now have fewer management layers, allowing colleagues to focus more on serving customers better.
In addition, we have just completed a major consultation and restructuring at head office, which will result in the removal of 720 roles. The leadership team has reduced from 110 to 65 people. This smaller team will have greater responsibility and accountability for bigger areas of the business.
6. To make core supermarkets strong again
We aim to deliver our strengths in every store. We have nearly completed a programme to get all of the estate to a consistent standard, Back-to-Best, both inside and out. This will be done by the end of October.
We will accelerate the refit programme. We have over 200 stores that have not been brightened-up for over five years. Our new Fresh Look refit programme will upgrade the estate by the end of 2018/19.
All these improvements will be achieved within our existing capital expenditure expectations.
New leadership team
Key to delivering the strategy and six priorities will be a strong management team. We have made good progress during the first half and now have a leadership team comprising home grown talent and experienced industry professionals recruited from outside Morrisons.
We have almost completed the formation of a new Executive team, which oversees the day-to-day operations of the business. It will comprise seven people. Alongside David Potts (CEO) and Trevor Strain (CFO), are Darren Blackhurst (Commercial Director), Gary Mills (Retail Director), Clare Grainger (People Director) and Mark Amsden (Company Secretary and General Counsel). We are seeking to fill the one remaining vacancy, Customer Director. After 25 years' service, Martyn Jones (Corporate Services Director) will retire at the end of October.
Darren has extensive commercial experience. He joined Morrisons from B&Q, where he was Commercial Director. Previously he was Chief Executive of Matalan, and Chief Merchandising Officer of Asda.
(MORE TO FOLLOW) Dow Jones Newswires
September 10, 2015 02:01 ET (06:01 GMT)
Gary has more than 30 years' retail experience, with Stewarts Supermarkets in Northern Ireland and with Tesco in both Ireland and the UK. Gary's experience covers all areas of retail and all formats, including supermarkets and convenience.
Clare has nearly 25 years of experience in Human Resources and management, mostly in the retail sector with Morrisons and, before that, Asda. Most recently she has been Morrisons interim Group Retail Director and has been leading the business through a number of measures to improve the customer shopping trip.
Outside the Executive team, we have also made some key internal and external appointments in Commercial, Operations, Property, and Human Resources. We continue to identify the talent required to improve capability and are confident we are developing a strong leadership team to deliver the turnaround.
Online
We remain pleased with the key customer metrics of our online business and are on track with our original plan. We are also considering the broader digital opportunity, and how we can grow our online proposition while achieving an attractive return on capital.
Convenience
Yesterday we announced the sale of 140 M local convenience stores for a consideration of c.GBP25m in cash. We expect to incur a loss on disposal of around GBP30m during the second half of 2015/16. Morrisons retains a guarantee on individual lease obligations, which could revert to Morrisons if the new business does not succeed. The residual contingent liability in this event is estimated at up to GBP20m.
Convenience remains an important growth channel, and we will continue to consider capital-light, returns-enhancing opportunities in the future.
Financial strategy and update
Capital allocation framework
Our capital allocation framework is unchanged. Our first priority is to invest to support the store estate and infrastructure, and reduce costs. Second, we will seek to maintain debt ratios that support our target of an investment grade credit rating. Third, we will invest in profitable growth opportunities. Fourth, we will pay dividends and; finally, any surplus capital will be returned to shareholders.
Optimise assets
We are continually reviewing the performance of our supermarket store portfolio. In addition to the ten stores closed earlier this year, we are today announcing the proposed closure of 11 further stores which do not cover their cost of capital. For 2014/15, sales of the 11 stores were GBP86m and they were slightly EBIT loss making.
There will be a related one-off closure cost of GBP20m for the 11 stores during the second half of 2015/16.
We have opened one new store this year and do not plan to open any more during the remainder of 2015/16. In 2016/17, we expect the sales contribution from net new stores to be negative.
Shareholder returns
The 2015/16 total dividend will be not less than 5p per share, which the Board believes reflects the commitment to the capital allocation framework, while enabling cash flow flexibility to invest in delivering the turnaround. Beyond 2015/16, the dividend will be determined and communicated as appropriate by the Board.
GBP1bn cost savings
We achieved first half cost savings of GBP189m, bringing the total to GBP419m in 18 months. We continue to expect GBP1bn of cost savings in the three years to the end of 2016/17, but are reviewing the different opportunities and re-prioritising components.
The recently announced head office restructure and harmonisation of the pension schemes will have immediate benefits. We have also been developing some new in-store cost saving initiatives, many of which have been successful and are already being introduced. For example, improved planning and control initiatives in our in-store warehouses have enabled better visibility of stock flow.
We are not rolling-out sales based ordering (SBO) immediately. One of our key priorities is better on-shelf availability, through improved and streamlined in-store process and updated stock ordering technology. These changes will deliver many of the cost saving benefits of SBO without the time, capital, and disruption risks SBO roll-out could have brought.
Cash flow and working capital
Our free cash flow plans are progressing well, and we remain on-track to generate GBP2bn operating free cash flow in the three years to end-2016/17. This includes a target of GBP600m of operating working capital improvement. With GBP125m in the first half, we have now generated GBP331m of operating working capital 18 months into that plan.
Property disposals
Our GBP1bn three year property disposal plan is on-track with GBP629m achieved so far, including GBP181m during the first half. We remain committed to a freehold store portfolio of over 80%, and are currently at 85%. The focus is now on property development opportunities and non-core asset disposals. We expect a net annual rent impact towards the lower end of the previously guided GBP20m-GBP25m range.
Capital expenditure
We have reviewed our capital expenditure plans in detail. All components fell during the first half - new stores, non-core channels and IT. We still expect full year capital expenditure to be around GBP400m, as the Fresh Look refits start in the second half.
In future, we expect core supermarkets' capital expenditure to be sustainable at around GBP400m-GBP450m per annum. In addition, we now expect the previously announced 2015/16 GBP100m onerous contracts to be spread over the next two years, meaning GBP50m is now expected in 2015/16 and a total of GBP100m in 2016/17.
Debt
Net debt has fallen by GBP254m since year-end, and we expect further progress in future. The half-year position of GBP2,086m is already within our 2015/16 year-end target range of GBP1.9bn-GBP2.1bn.
Pension
We intend to launch a defined contribution scheme to sit alongside our Retirement Saver scheme. This will provide a lower cost option for our colleagues to save for retirement. Subject to consultation, we anticipate this will become the auto-enrolment scheme for colleagues in the future, and we expect to incur a related charge of GBP35m in the second half.
Commercial income
During the first half, commercial income was GBP179m (2014/15: GBP194m). Our definition comprises suppliers' marketing contributions and volume-based rebates, but excludes promotional funding as these are automatic deductions from costs and are triggered as units are sold with no subjectivity or judgement applied.
ROCE
We remain focussed on ROCE as an important KPI, and are committed to improving future returns.
2015 Long Term Incentive Plan awards
Once the performance targets for the 2015 Long Term Incentive Plan awards have been determined, they will be communicated to shareholders via a disclosure in the Investor Relations section of the Morrisons website.
Corporate responsibility and community
How we operate is very important to us. Our corporate responsibility programme ensures we work in a way that is right for our customers, colleagues, suppliers and communities, creating longer term sustainable growth. In June, we published our 2014/15 CR Review, which was independently verified by our assurance providers, DNV GL. It is available to download at www.morrisons-corporate.com/cr
Shortlisted for Most Sustainable Retailer of the Year
We've been recognised for our responsible business programme at this year's Retail Industry Awards and have been shortlisted for Most Sustainable Retailer of the Year. This award is for retailers who can demonstrate their full commitment to driving change by improving the sustainability of their operations.
Sustainable Fisheries - Ocean Disclosure Project
It is important that our customers know where our fish comes from and how it has been caught. We continue to work hard with our suppliers to ensure that all fish we stock is responsibly sourced, and to improve and certify all areas of our supply chain.
We have taken part in the Ocean Disclosure Project and demonstrated our commitment to corporate transparency by publishing the full lists of fisheries we use for sourcing alongside data on sustainability. The initiative, conducted with the Sustainable Fisheries Partnership, represents a step forward in corporate reporting.
Supporting National charity partner, Sue Ryder
Our customers and colleagues have so far raised a fantastic GBP3.2m for our partnership with Sue Ryder. We are working with the charity to help and support families throughout the UK. At the heart of the partnership is a shared belief that everyone should be able to get the care they want when they need it most, and that their families should be supported through the most difficult times.
Morrisons partnership will enable the charity to establish community clinics, end-of-life-care online support communities, and family support teams.
Reducing our carbon emissions
Our commitment to reduce operational carbon emissions by 30% by 2020, from a 2005 baseline remains a significant focus within our business. With five years of investment still to go, we have so far achieved a reduction of 23%.
Colleagues
Earlier this year we introduced flexible benefits for colleagues - with the opportunity to sacrifice salary for childcare vouchers, cycle-to-work, laptops, tablets and mobile phones, plus a range of health and wellbeing options such as health assessments, dental and optical cover.
We are committed to supporting our colleagues in playing an active part in their communities. We have launched the Morrisons Foundation, through which we aim to improve people's lives, through match funding colleagues and offering grants to registered charities throughout the UK.
Notes:
(1) Underlying profit before tax and underlying earnings per share include new business development and restructuring costs, but exclude profit/loss relating to property disposals and sale of businesses, IAS 19 pension interest, impairment and provision for onerous contracts.
Wm Morrison Supermarkets PLC
(MORE TO FOLLOW) Dow Jones Newswires
September 10, 2015 02:01 ET (06:01 GMT)
Condensed consolidated financial statements
Consolidated statement of comprehensive income
26 weeks ended 2 August 2015
26 weeks ended 26 weeks ended 2 August 2015 3 August 2014 52 weeks ended (unaudited) (unaudited) 1 February 2015 (audited) Note GBPm GBPm GBPm ------------------------------------- --------------- --------------- ----------------- --------------------------- Revenue 3 8,064 8,496 16,816 Cost of sales (7,753) (8,100) (16,055) ------------------------------------- --------------- --------------- ----------------- --------------------------- Gross profit 311 396 761 ------------------------------------- --------------- --------------- ----------------- --------------------------- Other operating income 34 39 78 Profit/loss on disposal and exit of properties and sale of businesses 2 96 58 135 Administrative expenses (269) (206) (1,670) ------------------------------------- --------------- --------------- ----------------- --------------------------- Operating profit/(loss) 172 287 (696) ------------------------------------- --------------- --------------- ----------------- --------------------------- Finance costs 4 (52) (49) (105) Finance income 4 5 - 7 Share of profit of joint venture (net of tax) 1 1 2 ------------------------------------- --------------- --------------- ----------------- --------------------------- Profit/(loss) before taxation 126 239 (792) Analysed as: ------------------------------------- --------------- --------------- ----------------- --------------------------- Underlying profit before tax 117 181 345 Adjustments for: Impairment and provision for onerous contracts (87) - (1,273) Profit/loss on disposal and exit of properties 96 54 131 --------------- ----------------- --------------------------- 9 54 (1,142) Profit arising on disposal of Kiddicare.com Limited - 4 4 Net pension interest income - - 1 ------------------------------------- --------------- --------------- ----------------- --------------------------- 126 239 (792) Taxation 5 (19) (56) 31 ------------------------------------- --------------- --------------- ----------------- --------------------------- Profit/(loss) for the period attributable to the owners of the Company 107 183 (761) ------------------------------------- --------------- --------------- ----------------- --------------------------- Other comprehensive income/(expense) Items that will not be reclassified to profit or loss: Remeasurement of defined benefit pension schemes 11 61 11 (31) Tax on defined benefit pension schemes (12) (2) 6 ------------------------------------- --------------- --------------- ----------------- --------------------------- 49 9 (25) ------------------------------------- --------------- --------------- ----------------- --------------------------- Items that may be reclassified subsequently to profit or loss: Cash flow hedging movement 11 20 (9) Tax on cash flow hedging movement (2) (4) 2 9 16 (7) ------------------------------------- --------------- --------------- ----------------- --------------------------- Other comprehensive income/(expense) for the period, net of tax 58 25 (32) ------------------------------------- --------------- --------------- ----------------- --------------------------- Total comprehensive income/(expense) for the period attributable to the owners of the Company 165 208 (793) ------------------------------------- --------------- --------------- ----------------- --------------------------- Earnings per share (pence) 6 - basic 4.59 7.84 (32.63) - diluted 4.57 7.81 (32.63) -------------- --------------------- --------------- --------------- ----------------- --------------------------- Consolidated balance sheet 2 August 2015 2 August 2015 3 August 2014 1 February 2015 (unaudited) (unaudited) (audited) Note GBPm GBPm GBPm -------------- ------ --------------- --------------- ----------------- --------------------------- Assets Non-current assets Goodwill and intangible assets 7 536 503 520 Property, plant and equipment 8 7,158 8,334 7,252 Investment property 9 40 76 68 Net pension asset 11 27 - 4 Investment in joint venture 69 67 68 Investments 31 31 31 Derivative financial 13 - - assets 7,874 9,011 7,943 -------------- -------------------- --------------- --------------- ----------------- --------------------------- Current assets Stock 639 667 658 Debtors 208 403 239 Derivative financial assets 1 1 6 Cash and cash equivalents 156 164 241 ------------------------------------ --------------- --------------- ----------------- --------------------------- 1,004 1,235 1,144 Non-current assets classified as held-for-sale 10 49 107 84 ------------------------------------ --------------- --------------- ----------------- --------------------------- 1,053 1,342 1,228 ------------------------------------ --------------- --------------- ----------------- --------------------------- Liabilities Current liabilities
(MORE TO FOLLOW) Dow Jones Newswires
September 10, 2015 02:01 ET (06:01 GMT)
Creditors (2,316) (2,232) (2,221) Short term borrowings (1) (550) (11) Derivative financial liabilities (16) (11) (18) Current tax liabilities (42) (36) (23) ------------------------------------ --------------- --------------- ----------------- --------------------------- (2,375) (2,829) (2,273) -------------- -------------------- --------------- --------------- ----------------- --------------------------- Non-current liabilities Borrowings (2,139) (2,182) (2,508) Derivative financial liabilities (100) (30) (50) Deferred tax liabilities (427) (454) (415) Net pension liabilities 11 (14) (5) (43) Provisions (333) (171) (288) ------------------------------------ --------------- --------------- ----------------- --------------------------- (3,013) (2,842) (3,304) -------------- -------------------- --------------- --------------- ----------------- --------------------------- Net assets 3,539 4,682 3,594 ------------------------------------ --------------- --------------- ----------------- --------------------------- Shareholders' equity Share capital 234 234 234 Share premium 127 127 127 Capital redemption reserve 39 39 39 Merger reserve 2,578 2,578 2,578 Retained earnings and hedging reserve 561 1,704 616 ------------------------------------ --------------- --------------- ----------------- --------------------------- Total equity attributable to the owners of the Company 3,539 4,682 3,594 ------------------------------------ --------------- --------------- ----------------- --------------------------- Consolidated cash flow statement 26 weeks ended 2 August 2015 26 weeks ended 26 weeks ended 52 weeks ended 2 August 2015 3 August 2014 1 February 2015 (unaudited) (unaudited) (audited) Note GBPm GBPm GBPm ------------------------------ ----- --------------- --------------- ----------------- Cash flows from operating activities Cash generated from operations 12 471 551 970 Interest paid (41) (45) (106) Taxation (paid)/received (2) (39) 10 ------------------------------ ----- --------------- --------------- ----------------- Net cash inflow from operating activities 428 467 874 ------------------------------ ----- --------------- --------------- ----------------- Cash flows from investing activities Interest received - - 4 Proceeds from the sale of property, plant and equipment and businesses 181 202 450 Purchase of property, plant and equipment and investment property (72) (189) (385) Purchase of intangible assets (67) (68) (135) Net cash inflow/(outflow) from investing activities 42 (55) (66) ------------------------------ ----- --------------- --------------- ----------------- Cash flows from financing activities Purchase of own shares for trust 17 - (8) (8) New borrowings - 291 296 Net repayment of revolving credit facility (320) - (256) Repayment of other borrowings (10) (575) (550) Dividends paid to equity shareholders 15 (225) (214) (308) ------------------------------ ----- --------------- --------------- ----------------- Net cash outflow from financing activities (555) (506) (826) ------------------------------ ----- --------------- --------------- ----------------- Net decrease in cash and cash equivalents (85) (94) (18) Cash and cash equivalents at start of period 240 258 258 ------------------------------ ----- --------------- --------------- ----------------- Cash and cash equivalents at end of period 13 155 164 240 ------------------------------ ----- --------------- --------------- ----------------- Reconciliation of net cash flow to movement in net debt in the period 26 weeks ended 26 weeks ended 52 weeks ended 2 August 2015 3 August 2014 1 February 2015 (unaudited) (unaudited) (audited) Note GBPm GBPm GBPm ------------------------------ ----- --------------- --------------- ----------------- Net decrease in cash and cash equivalents (85) (94) (18) Cash outflow from decrease in debt 330 575 806 Cash inflow from increase in borrowings - (291) (296) Other non-cash movements 9 19 (15) Opening net debt (2,340) (2,817) (2,817) ------------------------------ ----- --------------- --------------- ----------------- Closing net debt 13 (2,086) (2,608) (2,340) ------------------------------ ----- --------------- --------------- -----------------
Consolidated statement of changes in equity
Attributable to the owners of the Company ------------------------------------------------------------------------------------------ Share Share Capital Merger Hedging Retained Total capital premium redemption reserve reserve earnings equity reserve Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm ------------------- ----- ----------- ----------- ----------- ----------- ----------- ---------- ------------- 26 weeks ended 2 August 2015 (unaudited) At 2 February 2015 234 127 39 2,578 (22) 638 3,594 ------------------- ----- ----------- ----------- ----------- ----------- ----------- ---------- ------------- Profit for the period - - - - - 107 107 Other comprehensive income/(expense): Cash flow hedging movement - - - - 11 - 11 Pension remeasurement - - - - - 61 61 Tax in relation to components of other comprehensive income - - - - (2) (12) (14) Total comprehensive income for the period - - - - 9 156 165 ------------------- ----- ----------- ----------- ----------- ----------- ----------- ---------- ------------- Employee share option schemes: Share-based payments - - - - - 5 5
(MORE TO FOLLOW) Dow Jones Newswires
September 10, 2015 02:01 ET (06:01 GMT)
Dividends 15 - - - - - (225) (225) ------------------- ----- ----------- ----------- ----------- ----------- ----------- ---------- ------------- Total transactions with owners - - - - - (220) (220) ------------------- ----- ----------- ----------- ----------- ----------- ----------- ---------- ------------- At 2 August 2015 234 127 39 2,578 (13) 574 3,539 ------------------- ----- ----------- ----------- ----------- ----------- ----------- ---------- ------------- Attributable to the owners of the Company ------------------------------------------------------------------------------------------ Share Share Capital Merger Hedging Retained Total capital premium redemption reserve reserve earnings equity reserve Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm ------------------- ----- ----------- ----------- ----------- ----------- ----------- ---------- ------------- 26 weeks ended 3 August 2014 (unaudited) At 3 February 2014 234 127 39 2,578 (15) 1,729 4,692 ------------------- ----- ----------- ----------- ----------- ----------- ----------- ---------- ------------- Profit for the period - - - - - 183 183 Other comprehensive income/(expense): Cash flow hedging movement - - - - 20 - 20 Pension remeasurement - - - - - 11 11 Tax in relation to components of other comprehensive income - - - - (4) (2) (6) ------------------- ----- ----------- ----------- ----------- ----------- ----------- ---------- ------------- Total comprehensive income for the period - - - - 16 192 208 ------------------- ----- ----------- ----------- ----------- ----------- ----------- ---------- ------------- Purchase of trust shares 17 - - - - - (8) (8) Employee share option schemes: Share-based payments - - - - - 4 4 Dividends 15 - - - - - (214) (214) ------------------- ----- ----------- ----------- ----------- ----------- ----------- ---------- ------------- Total transactions with owners - - - - - (218) (218) ------------------- ----- ----------- ----------- ----------- ----------- ----------- ---------- ------------- At 3 August 2014 234 127 39 2,578 1 1,703 4,682 ------------------- ----- ----------- ----------- ----------- ----------- ----------- ---------- -------------
Consolidated statement of changes in equity (continued)
Attributable to the owners of the Company ----------------------------------------------------------------------- ----------- Share Share Capital Merger Hedging Retained Total capital premium redemption reserve reserve earnings equity reserve Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm ------------------- ----- ---------- ---------- ----------- ---------- ---------- ---------- ----------- 52 weeks ended 1 February 2015 (audited) At 3 February 2014 234 127 39 2,578 (15) 1,729 4,692 ------------------- ----- ---------- ---------- ----------- ---------- ---------- ---------- ----------- Loss for the period - - - - - (761) (761) Other comprehensive (expense)/income: Cash flow hedging movement - - - - (9) - (9) Pension remeasurement - - - - - (31) (31) Tax in relation to components of other comprehensive income - - - - 2 6 8 ------------------- ----- ---------- ---------- ----------- ---------- ---------- ---------- ----------- Total comprehensive expense for the period - - - - (7) (786) (793) ------------------- ----- ---------- ---------- ----------- ---------- ---------- ---------- ----------- Purchase of trust shares 17 - - - - - (8) (8) Employee share option schemes: Share-based payments - - - - - 11 11 Dividends 15 - - - - - (308) (308) ------------------- ----- ---------- ---------- ----------- ---------- ---------- ---------- ----------- Total transactions with owners - - - - - (305) (305) ------------------- ----- ---------- ---------- ----------- ---------- ---------- ---------- ----------- At 1 February 2015 234 127 39 2,578 (22) 638 3,594 ------------------- ----- ---------- ---------- ----------- ---------- ---------- ---------- ----------- Notes to the condensed consolidated financial statements 26 weeks ended 2 August 2015 1 SEGMENTAL REPORTING Following the change in management structure, the Executive Committee is considered to be the Group's chief operating decision maker. The information received by the Executive Committee is consistent with that received by the previous Management Board. There are no differences from the 2014/15 Annual report and financial statements in the basis of segmentation. The Directors consider there to be one operating segment, that of retailing. The Executive Committee uses the underlying profit figure to measure performance. A reconciliation of underlying profit to the statutory position can be found in note 2. The Executive Committee also reviews a balance sheet containing assets and liabilities which is as shown within the Consolidated balance sheet. UNDERLYING 2 EARNINGS The Directors consider that the underlying earnings and underlying adjusted earnings per share measures referred to in the results provide useful information for shareholders on underlying trends and performance. The adjustments are made to reported profit/loss to (a) remove impairment, provision for onerous contracts, or other similar items that do not relate to the Group's principal activities on an ongoing basis; (b) remove profit/loss arising on disposal and exit of properties and sale of businesses; (c) apply a normalised tax rate of 25.3% (3 August 2014: 26.0%, 1 February 2015: 26.1%); and (d) remove the impact of pension interest volatility. 26 weeks 26 weeks 52 weeks ended ended ended 2 August 3 August 1 February 2015 2014 2015 (unaudited) (unaudited) (audited) Note GBPm GBPm GBPm ------------------- --------------- ------------------------- ------------- -------------------- Profit/(loss) after tax 107 183 (761) Add back: tax charge/(credit) for the period (1) 19 56 (31) ------------------------------------ ------------------------- ------------- -------------------- Profit/(loss) before tax 126 239 (792)
(MORE TO FOLLOW) Dow Jones Newswires
September 10, 2015 02:01 ET (06:01 GMT)
Adjustments for: Impairment and provision for onerous contracts (1) 87 - 1,273 Profit/loss arising on disposal and exit of properties (1) (96) (54) (131) ------------------------- ------------- -------------------- (9) (54) 1,142 Profit on disposal of Kiddicare.com Limited (1) 16 - (4) (4) Net pension interest income(1) - - (1) Underlying profit before tax 117 181 345 ------------------------------------ ------------------------- ------------- -------------------- Normalised tax charge at 25.3%/26.0%/26.1% (1) (30) (47) (90) ------------------------------------ ------------------------- ------------- -------------------- Underlying profit after tax 87 134 255 ------------------------------------ ------------------------- ------------- -------------------- Adjustments marked (1) decrease post-tax underlying earnings by GBP20m (3 August 2014: decrease GBP49m, 1 February 2015: increase GBP1,016m), as shown in the reconciliation of earnings disclosed in note 6. Net profit on property is GBP9m. This includes profits arising on disposal of properties amounting to GBP96m. Following our continued review of the Group's store opening programme, this profit has been offset by an additional charge of GBP87m for changes in estimates related to the provisions for stores in the new space pipeline. In the period ended 1 February 2015, included within profit/loss arising on disposal and exit of properties is a charge of GBP19m relating to the closure of ten stores and six convenience stores. Impairment and provisions for onerous contracts in the period ended 1 February 2015 consists of GBP1,273m in relation to trading stores, of which GBP1,116m is impairment, GBP118m is onerous lease provisions, GBP30m relates to onerous commitments and GBP9m relating to lease premiums. Notes to the condensed consolidated financial statements (Continued) 26 weeks ended 2 August 2015 3 REVENUE 26 weeks 26 weeks 52 weeks ended ended ended 2 August 3 August 1 February 2015 2014 2015 (unaudited) (unaudited) (audited) GBPm GBPm GBPm -------------- --------------- ------------------------- ------------- -------------------- Sale of goods in stores and online 6,388 6,457 12,999 Fuel 1,583 1,902 3,576 -------------- --------------- ------------------------- ------------- -------------------- Total store-based and online sales 7,971 8,359 16,575 Other sales 93 137 241 -------------- --------------- ------------------------- ------------- -------------------- Total revenue 8,064 8,496 16,816 -------------- --------------- ------------------------- ------------- -------------------- FINANCE COSTS 4 AND INCOME 26 weeks 26 weeks 52 weeks ended ended ended 2 August 3 August 1 February 2015 2014 2015 (unaudited) (unaudited) (audited) GBPm GBPm GBPm ---------------------------- ------------- ------------- ------------ Interest payable on short term loans and bank overdrafts (2) (6) (10) Interest payable on bonds and loan notes (47) (45) (96) Interest capitalised 3 5 11 ---------------------------------------- ------------- ------------- ------------ Total interest payable (46) (46) (95) Provisions: unwinding of discount (5) (3) (7) Other finance costs (1) - (3) Finance costs (52) (49) (105) ---------------------------------------- ------------- ------------- ------------ Bank interest received - - 5 Amortisation of bonds - - 1 Net pension interest income - - 1 Other finance income 5 - - Finance income 5 - 7 ---------------------------------------- ------------- ------------- ------------ Net finance cost (47) (49) (98) ---------------------------------------- ------------- ------------- ------------
Notes to the condensed consolidated financial statements (Continued)
26 weeks ended 2 August 2015
5 TAXATION The standard rate of corporation tax changed from 21% to 20% with effect from 1 April 2015. The normalised rate of tax of 25.3% (3 August 2014: 26.0%, 1 February 2015: 26.1%) has been calculated using full year projections and has been applied to the half year underlying profit. The standard rate of corporation tax of 20.2% (3 August 2014: 21.3%, 1 February 2015: 21.3%) for the year has been applied to the half year impairment and provision for onerous contracts charge, and the profit/loss on property related transactions, on an item by item basis. Legislation to reduce the standard rate of corporation tax from 20% to 19% from 1 April 2017 and to 18% from 1 April 2020 was included in Summer Finance Bill 2015. The legislation was not substantially enacted by the balance sheet date. Accordingly, deferred tax has been provided at 20%, being the rate substantively enacted by 2 August 2015, as required by IAS 34 Interim Financial Reporting. If deferred tax was provided at 18%, the deferred tax liability recognised on the balance sheet would be reduced by GBP34m. 6 EARNINGS PER SHARE Basic earnings/(loss) per share (EPS) is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period. For diluted EPS, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all potentially dilutive ordinary shares. Underlying EPS It is the Directors' view that underlying EPS is the fairest reflection of the underlying results of the business.
(MORE TO FOLLOW) Dow Jones Newswires
September 10, 2015 02:01 ET (06:01 GMT)
26 weeks 26 weeks 52 weeks ended ended ended 2 August 3 August 1 February 2015 2014 2015 (unaudited) (unaudited) (audited) Pence Pence Pence --------------------- -------------------- ----------------------- Basic Diluted Basic Diluted Basic Diluted Basic EPS 4.59 4.57 7.84 7.81 (32.63) (32.63)(1) Underlying EPS 3.73 3.71 5.74 5.72 10.93 10.89 GBPm GBPm GBPm --------------------- -------------------- ----------------------- Basic Diluted Basic Diluted Basic Diluted Basic earnings/(loss) Earnings/(loss) attributable to ordinary shareholders 107 107 183 183 (761) (761) Underlying earnings Earnings/(loss) attributable to ordinary shareholders 107 107 183 183 (761) (761) Adjustments to determine underlying profit (note 2) (20) (20) (49) (49) 1,016 1,016 Underlying earnings attributable to ordinary shareholders 87 87 134 134 255 255 Millions Millions Millions Basic Diluted Basic Diluted Basic Diluted Weighted average number of shares Ordinary shares in issue/diluted ordinary shares 2,333.0 2,342.0 2,333.0 2,344.0 2,332.5 2,341.5 -------------------- ----------- -------- ---------- -------- -------- ------------- (1) The effect of dilutive instruments would improve basic EPS, as total earnings for the 52 weeks ended 1 February 2015, is a loss of GBP761m. Diluted EPS cannot exceed basic EPS, therefore the diluted EPS disclosed above has been adjusted so that it equals basic EPS. Notes to the condensed consolidated financial statements (Continued) 26 weeks ended 2 August 2015 GOODWILL AND INTANGIBLE 7 ASSETS 2 August 3 August 1 February 2015 2014 2015 (unaudited) (unaudited) (audited) GBPm GBPm GBPm Net book value At beginning of the period 520 458 458 Additions 59 70 126 Interest capitalised 3 4 9 Reclassifications - (1) - Amortisation (46) (28) (70) Impairment - - (3) At end of the period 536 503 520 ----------------------- ----------- -------- ---------- -------- -------- -------- The carrying value of goodwill and intangible assets principally consists of software development costs of GBP514m (3 August 2014: GBP477m, 1 February 2015: GBP495m). During the period assets costing GBP23m became fully depreciated (3 August 2014: GBP3m, 1 February 2015: GBP5m). Included within software development costs are assets under construction of GBP122m (3 August 2014: GBP212m, 1 February 2015: GBP153m). 8 PROPERTY, PLANT AND EQUIPMENT 2 August 3 August 1 February 2015 2014 2015 (unaudited) (unaudited) (audited) GBPm GBPm GBPm Net book value At beginning of the period 7,252 8,625 8,625 Additions 74 164 388 Interest capitalised - 1 2 Transfers to investment property (3) - (1) Transfers to assets held-for-sale (4) (283) (323) Reclassifications - 1 - Disposals (18) (11) (11) Depreciation charge for the period (143) (163) (315) Impairment - - (1,113) ----------------------- --------------------- -------------------- ------------------ At end of the period 7,158 8,334 7,252 ----------------------- --------------------- -------------------- ------------------
During the period assets costing GBP66m became fully depreciated (3 August 2014: GBP361m, 1 February 2015: GBP439m). Included above are assets under construction of GBP12m (3 August 2014: GBP84m, 1 February 2015: GBP27m) and the net book value of land is GBP3,328m (3 August 2014: GBP3,764m, 1 February 2015: GBP3,329m).
Notes to the condensed consolidated financial statements (Continued)
26 weeks ended 2 August 2015
9 INVESTMENT PROPERTIES ---------------------------------------------------------------------------------- 2 August 3 August 1 February 2015 2014 (unaudited) 2015 (unaudited) GBPm (audited) GBPm GBPm -------------------------- ------------- ------------------ ----------- Net book value At beginning of period 68 119 119 Additions - 3 1 Transfers from property, plant and equipment 3 - 1 Transfers to assets held-for-sale (30) (45) (51) Depreciation charge for the period (1) (1) (2) -------------------------- ------------- ------------------ ----------- At end of the period 40 76 68 -------------------------- ------------- ------------------ ----------- 10 NON-CURRENT ASSETS CLASSIFIED AS HELD-FOR-SALE 2 August 3 August 1 February 2015 2014 (unaudited) 2015 (unaudited) GBPm (audited) GBPm GBPm --------------------------- ------------- ------------------ ----------- Net book value At beginning of period 84 - - Additions - - 3 Transfers from property, plant and equipment at net book value 4 283 323 Transfers from investment property at net book value 30 45 51 Disposals (69) (221) (293) At end of the period 49 107 84 --------------------------- ------------- ------------------ ----------- 11 PENSIONS The Group operates a number of defined benefit retirement schemes (together 'the Schemes') providing benefits based on a formula that depends on factors including the employee's age and number of years of service. The Morrison and Safeway Schemes provide
(MORE TO FOLLOW) Dow Jones Newswires
September 10, 2015 02:01 ET (06:01 GMT)
pension benefits based on either the employee's compensation package or career average revalued earnings (CARE) (the 'CARE Schemes'). The Retirement Saver Plan ('RSP') is a cash balance scheme, which provides a lump sum benefit based upon a defined proportion of an employee's annual earnings, which is revalued each year in line with inflation. The movement in the net pension asset/(liability) during the period was as follows: 2 August 3 August 1 February 2015 2014 (unaudited) 2015 (unaudited) GBPm (audited) GBPm GBPm ------------------------------- ------------- ------------------ ----------- Net pension liability at start of the period (39) (11) (11) Net interest income - - 1 Curtailment gain 2 - 1 Remeasurement in other comprehensive income 61 11 (31) Employer contributions 40 38 85 Current service cost (50) (42) (80) Administrative expenses (1) (1) (4) Net pension asset/(liability) at the end of the period 13 (5) (39) ------------------------------- ------------- ------------------ ----------- This is disclosed in the balance sheet as follows: 2 August 2015 (unaudited) GBPm -------------------------------------------- --- -------------- Safeway CARE scheme 20 Retirement Saver Plan 7 Morrison CARE scheme (14) Net pension asset at the end of the period 13 ------------------------------------------------- -------------- Closure of CARE Schemes to future accrual In January 2015 the Group announced that it had reached an agreement in principle with the Trustees of the CARE Schemes to close them to future accrual, subject to the outcome of consultation with current scheme members. This consultation has concluded and an agreement has been reached, with changes effective from 5 July 2015. The financial effect of closing these schemes to future accrual is to reduce the Group's exposure to future volatility, increases in pension liabilities and cost. Subsequently, the Group has entered into an agreement in principle with the Trustees of the Scottish Limited Partnership. In addition to the GBP90m of properties contributed to the existing pension funding structure in 2012/13, the Group has provided an additional asset contribution of GBP150m. Under this agreement, the Group retains control of these additional properties unless the Group becomes insolvent. In the event of insolvency, these assets would form part of the Scheme assets. 12 CASH GENERATED FROM OPERATIONS 26 weeks 26 weeks 52 weeks ended ended ended 2 August 3 August 1 February 2015 2014 2015 (unaudited) (unaudited) (audited) GBPm GBPm GBPm -------------------------------- ------------- -------------- ------------- Profit/(loss) for the period 107 183 (761) Net finance costs 47 49 98 Taxation charge/(credit) 19 56 (31) Share of profit of joint venture (1) (1) (2) ------------------------------------- ------------- -------------- ------------- Operating profit/(loss) 172 287 (696) Adjustments for: Depreciation and amortisation 190 192 387 Impairment of property, plant and equipment and intangible assets - - 1,116 Profit arising on disposal and exit of properties and sale of businesses (96) (58) (135) Adjustment for non-cash element of pensions charges 9 5 (5) Other non-cash charges 5 5 14 Decrease in stock (1) 19 171 180 Decrease/(increase) in debtors (1) 28 (7) 77 Increase/(decrease) in creditors (1) 107 (40) (76) Increase/(decrease) in provisions (1) 37 (4) 108 ------------------------------------- ------------- -------------- ------------- Cash generated from operations 471 551 970 ------------------------------------- ------------- -------------- -------------
Total working capital movement (the sum of items marked (1) above) is GBP191m in the period (3 August 2014: GBP120m, 1 February 2015: GBP289m). This includes GBP83m (3 August 2014: GBPnil, 1 February 2015: GBP157m) as a result of the impairment and provision for onerous contracts charge in the period (see note 2) and is net of GBP17m (3 August 2014: GBP24m, 1 February 2015: GBP74m) of onerous capital payments. The working capital inflow excluding impairment and provision for onerous contracts is GBP125m (3 August 2014: GBP144m, 1 February 2015: GBP206m).
Included within debtors in the Consolidated balance sheet is GBP1m in respect of property disposals recognised in the period (3 August 2014: GBP80m, 1 February 2015: GBPnil).
Notes to the condensed consolidated financial statements (Continued)
26 weeks ended 2 August 2015
13 ANALYSIS OF NET DEBT 2 August 3 August 1 February 2015 2014 2015 (unaudited) (unaudited) (audited) GBPm GBPm GBPm ---------------------------- ----- ---- ------------- ------------- ----------- Cash and cash equivalents per balance sheet 156 164 241 Bank overdrafts (1) - (1) ----------------------------------------- ------------- Cash and cash equivalents per cash flow 155 164 240 ----------------------------------------- ------------- ------------- ----------- Interest rate swaps 13 - - ----------------------------------------- ------------- ------------- ----------- Non-current financial assets 13 - - ----------------------------------------- ------------- ------------- ----------- Foreign exchange forward contracts 1 1 6 ----------------------------------------- ------------- ------------- ----------- Current financial assets 1 1 6 ----------------------------------------- ------------- ------------- ----------- Short term borrowings and current bonds - (550) (10) Fuel and energy price contracts (10) (11) (12) Foreign exchange forward contracts (6) - (6) ----------------------------------------- ------------- ------------- ----------- Current financial liabilities (16) (561) (28) ----------------------------------------- ------------- ------------- ----------- Bonds (1,986) (2,036) (2,030) Private placement loan notes (158) (146) (164) Revolving credit facility 5 - (314) Cross-currency contracts and interest rate swaps (94) (30) (45)
(MORE TO FOLLOW) Dow Jones Newswires
September 10, 2015 02:01 ET (06:01 GMT)
Fuel and energy price contracts (6) - (5) Non-current financial liabilities (2,239) (2,212) (2,558) ----------------------------------------- ------------- ------------- ----------- Net debt (2,086) (2,608) (2,340) ----------------------------------------- ------------- ------------- ----------- FINANCIAL 14 INSTRUMENTS 2 August 2015 3 August 2014 1 February 2015 (unaudited) (unaudited) (audited) Fair Fair Fair Carrying amount value Carrying amount value Carrying amount value GBPm GBPm GBPm GBPm GBPm GBPm --------------------- --------------------- --------- ---------------- -------- ----------------- -------- Non-current financial assets Derivative financial instruments 13 13 - - - - Total non-current financial assets 13 13 - - - - Current financial assets Derivative financial instruments 1 1 1 1 6 6 -------------------------- --------------------- --------- ---------------- -------- ----------------- -------- Total current financial assets 1 1 1 1 6 6 Current financial liabilities Short-term borrowings - - (550) (550) (10) (10) Derivative financial instruments (16) (16) (11) (11) (18) (18) -------------------------- --------------------- --------- ---------------- -------- ----------------- -------- Total current financial liabilities (16) (16) (561) (561) (28) (28) -------------------------- --------------------- --------- ---------------- -------- ----------------- -------- Non-current financial liabilities Borrowings (2,139) (2,176) (2,182) (2,367) (2,508) (2,604) Derivative financial instruments (100) (100) (30) (30) (50) (50) -------------------------- --------------------- --------- ---------------- -------- ----------------- -------- Total non-current financial liabilities (2,239) (2,276) (2,212) (2,397) (2,558) (2,654) -------------------------- --------------------- --------- ---------------- -------- ----------------- -------- 14 FINANCIAL INSTRUMENTS (continued)
All financial instruments carried at fair value within the Group at 2 August 2015 are financial derivatives and all are categorised as Level 2 instruments (3 August 2014 and 1 February 2015: Level 2). Level 2 fair values for simple over-the-counter derivatives are calculated by using benchmark observable market interest rates to discount future cash flows.
Notes to the condensed consolidated financial statements (Continued)
26 weeks ended 2 August 2015
15 DIVIDENDS 26 weeks 26 weeks 52 weeks ended ended ended 2 August 3 August 1 February 2015 2014 2015 (unaudited) (unaudited) (audited) GBPm GBPm GBPm Equity dividends paid in the period 225 214 308 The dividend paid in the period represents the cash payment of the final dividend of 9.62p from the 52 weeks ended 1 February 2015 (26 weeks ended 3 August 2014: represents the cash payment of the final dividend of 9.16p for the 52 weeks ended 2 February 2014. 52 weeks ended 1 February 2015: represents the cash payment of the final dividend of 9.16p for the 52 weeks ended 2 February 2014 and the interim dividend of 4.03p for the 26 weeks ended 3 August 2014). The Directors are proposing an interim dividend of 1.50p per share which will be paid on 9 November 2015 to shareholders who are on the register of members on 2 October 2015. The interim dividend will absorb an estimated GBP35m of shareholders' funds. This amount will be charged to retained earnings when paid. 16 DISPOSAL OF KIDDICARE.COM LIMITED In the prior year, the Group disposed of Kiddicare.com Limited to Endless LLP, receiving consideration of GBP2m for the sale of the shares. This resulted in a profit on disposal of GBP4m in the comparative period. This profit was one-off in nature and so was excluded from reported underlying profit. As at 2 August 2015, one out of the ten leases relating to Kiddicare remained unassigned. 17 SHARE CAPITAL Trust shares Included in retained earnings is a deduction of GBP46,485 (3 August 2014: GBP5m, 1 February 2015: GBP6m) in respect of own shares held at the balance sheet date. This represents the cost of 21,722 (3 August 2014: 2,915,374, 1 February 2015: 2,907,374) of the Group's ordinary shares (nominal value of GBP2,172 (3 August 2014: GBP0.3m, 1 February 2015: GBP0.3m)). These shares are held in a trust and were acquired by the business to meet obligations under the Group's employee share plans using funds provided by the Group. The market value of the shares at 2 August 2015 was GBP39,643 (3 August 2014: GBP5m, 1 February 2015: GBP5m). The trust has waived its right to dividends. These shares are not treasury shares as defined by the London Stock Exchange. During the period the Group acquired 116,663 (3 August 2014: 4,000,000, 1 February 2015: 4,000,000) of its own shares to hold in trust for consideration of GBP0.2m (3 August 2014: GBP8m, 1 February 2015: GBP8m), and utilised 3,002,315 (3 August 2014: 3,023,234, 1 February 2015: 3,031,234) trust shares to satisfy awards under the Group's employee share plans. Issue of new shares The Group issued 35,119 (3 August 2014: 37,970, 1 February 2015: 41,962) new shares to satisfy options exercised by employees during the period. Proceeds received on exercise of these shares amounted to GBP0.1m (3 August 2014: GBP0.1m, 1 February 2015: GBP0.1m). Notes to the condensed consolidated financial statements (Continued) 26 weeks ended 2 August 2015 18 COMMERCIAL INCOME Commercial income remains an area of focus for the Group. This is an area which is currently not directly covered by accounting standards and there is no prescriptive disclosure best practice. The Financial Reporting Council ('FRC') has urged the Boards of retailers and suppliers to provide greater clarity in this area. Commercial income controls were disclosed within the Corporate Governance section of the 2014/15 Annual report and financial statements. The disclosure below is the first time the Group has made commercial income disclosures at the half year. The disclosure summarises the quantum earned in the income statement and the balance sheet position as at 2 August 2015. Commercial income is recognised as a deduction from cost of sales, based on expected entitlement that has been earned up to the balance sheet date for each relevant supplier contract. The Group only recognises commercial income where there is documented evidence of an agreement with an individual supplier. The types of commercial income recognised by the Group and the recognition policies are: Type Description Recognition of deduction --------------- -------------------- ------------------------------------ Marketing Examples include Income is recognised over and income in respect the period as set out in the advertising of in-store specific supplier agreement. funding marketing and Income is invoiced once the
(MORE TO FOLLOW) Dow Jones Newswires
September 10, 2015 02:01 ET (06:01 GMT)
point of sale, performance conditions in as well as funding the supplier agreement have for advertising. been achieved. --------------- -------------------- ------------------------------------ Volume-based Income earned Income is recognised through rebates by achieving the year based on forecasts volume or spend for expected sales or purchase targets set volumes, informed by current by the supplier performance, trends, and the for specific terms of the supplier agreement. products over Income is invoiced throughout specific periods. the year in accordance with the specific supplier terms. In order to minimise any risk arising from estimation, supplier confirmations are also obtained to agree the final value to be recognised at year end, prior to it being invoiced. --------------- -------------------- ------------------------------------ Commercial income earned in the period, by type of income, is summarised below: 26 weeks 26 weeks 52 weeks ended ended ended 2 August 3 August 1 February 2015 2014 2015 (unaudited) (unaudited) (audited) GBPm GBPm GBPm Commercial income: Marketing and advertising funding 109 131 291 Volume-based rebates 70 63 134 ----------------------- ------------ ------------ ------------ Total commercial income 179 194 425 ----------------------- ------------ ------------ ------------ The following table summarises the uncollected commercial income at the balance sheet date at the end of each period: 2 August 3 August 2014 1 February 2015 2015 (unaudited) (unaudited) (audited) GBPm GBPm GBPm Commercial income trade debtor 12 11 10 Accrued commercial income 30 48 37 Commercial income due, offset against amounts owed 42 46 96 ---------------------- ------------- -------------- ----------- 84 105 143 ---------------------- ------------- -------------- ----------- As of 6 September 2015, GBP8m of the GBP12m commercial income trade debtor balance had been settled and GBP2m of the GBP30m accrued commercial income balance had been invoiced and settled. In addition, GBP31m of the GBP42m commercial income due had been offset against payments made. As at the 6 September 2015 all of the GBP143m commercial income held on the balance sheet at 1 February 2015 had been settled. Notes to the condensed consolidated financial statements (Continued) 26 weeks ended 2 August 2015 19 POST BALANCE SHEET EVENTS Disposal of Wm Morrison Convenience Stores Limited and associated M local assets Since the end of the period, on 9 September 2015, the Group has agreed the sale of its subsidiary Wm Morrison Convenience Stores Limited and associated M local assets to MLCG Limited for a cash consideration of c.GBP25m. The sale will result in an estimated loss on disposal of around GBP30m, which will be recognised in the second half. Following the sale, Wm Morrison Supermarkets PLC continues to guarantee leases in respect of its former convenience stores. If a lessee were to default, their lease obligations could revert back to the Group under the terms of the guarantees and become a liability of the Group. The contingent liability for the future rental commitment is estimated at up to GBP20m, although in the event of lessee default the Group will look to minimise its liability by finding alternative occupiers for each property as soon as possible.
Responsibility statement
We confirm that to the best of our knowledge:
-- the condensed consolidated set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union;
-- the Interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8 of the Disclosure and Transparency Rules.
By order of the Board
9 September 2015
The Board
The Board of Directors that served during the 26 weeks to 2 August 2015 and their respective responsibilities were:
Andrew Higginson - Chairman*
David Potts - Chief Executive Officer (appointed 16 March 2015)
Trevor Strain - Chief Financial Officer
Philip Cox CBE *
Belinda Richard * (appointed 1 September 2015)
Penny Hughes CBE*
Johanna Waterous CBE*
Irwin Lee * (appointed 1 September 2015)
Richard Gillingwater CBE* (resigned 4 June 2015)
Dalton Philips - Chief Executive Officer (resigned 16 February 2015)
* Non-Executive Director
Principal risks and uncertainties
The principal risks and uncertainties set out in Wm Morrison Supermarkets PLC's Annual report and financial statements for the 52 weeks ended 1 February 2015 remain the same for this Half-yearly financial report. Those risks and uncertainties can be summarised as follows:
High Impact Low Likelihood risks that may affect the Group:
-- Food and product safety -- Major business interruption -- Data security
Strategic risks which would impact the successful execution of the Group's strategy:
-- Business strategy -- Financial strategy -- Colleague engagement and development -- External market forces -- Supply chain management and integrity -- Competitor proposition and price -- IT systems upgrade -- Regulation
More information on the principal risks and how the Group mitigates those risks can be found on pages 30 to 33 of the 2014/15 Annual report and financial statements. You can view the 2014/15 Annual report and financial statements online on our corporate website, www.morrisons-corporate.com/ar2015.
Notes to the condensed consolidated financial statements (Continued)
26 weeks ended 2 August 2015
General information
Wm Morrison Supermarkets PLC (the 'Company') is a public limited company incorporated in the United Kingdom (Registration number 358949). The Company is domiciled in the United Kingdom and its registered address is Hilmore House, Gain Lane, Bradford, BD3 7DL, United Kingdom.
The 2015/16 Half-yearly financial report does not constitute financial statements within the meaning of Section 434 of the Companies Act 2006 and does not include all of the information and disclosures required for full annual financial statements.
The condensed consolidated financial statements for the 26 weeks to 2 August 2015 are unaudited. However, the auditor, PricewaterhouseCoopers LLP has carried out a review of the condensed consolidated financial statements and their report is included in this Half-yearly financial report.
The comparative financial information contained in the condensed consolidated financial statements in respect of the 52 weeks ended 1 February 2015 has been extracted from the 2014/15 Annual report and financial statements. Those financial statements have been reported on by PricewaterhouseCoopers LLP, and delivered to the Registrar of Companies. The report was unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and did not contain a statement under Section 498 of the Companies Act 2006.
The 2015/16 Half-yearly financial report was approved by the Board of Directors on 9 September 2015.
The Directors' assessment of the Group's ability to continue as a going concern is based on cash flow forecasts for the Group and the committed borrowing and debt facilities of the Group. These forecasts include consideration of future trading performance, working capital requirements, retail market conditions and the wider economy.
The Group remains able to borrow cash at competitive rates and the Group has negotiated, and has available to it, committed competitive facilities that will meet the Group's needs in the short and medium term.
Having reassessed the principal risks, the directors considered it appropriate to adopt the going concern basis of accounting in preparing the interim financial information.
Basis of preparation
(MORE TO FOLLOW) Dow Jones Newswires
September 10, 2015 02:01 ET (06:01 GMT)
1 Year Morrison (wm) Supermarkets Chart |
1 Month Morrison (wm) Supermarkets Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions